Court of Appeals Digest

This column summarizes selected published opinions of the Wisconsin Court of Appeals. Prof. Daniel D. Blinka and Prof. Thomas J. Hammer invite comments and questions about the digests. They can be reached at the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.

Civil Procedure

Loppnow sued Bielik after Loppnow received injuries in a fight. The circuit court ruled that Loppnow failed to exercise reasonable diligence in his attempts to serve process on Bielik in Florida, and the court dismissed the action against Bielik with prejudice. See Wis. Stat. § 801.11(1)(c).

The court of appeals reversed in an opinion written by Judge Neubauer. The court reviewed the main cases on service of process. “The guiding principle in these cases is that, when pursuing any leads or information reasonably calculated to make personal service possible, the plaintiff must not stop short of pursuing a viable lead – or in other words, stop short ‘of the place where if [the diligence] were continued might reasonably be expected to uncover an address of the person on whom service is sought.’ Haselow, 212 Wis. 2d at 589. In West, the plaintiff stopped short of pursuing information he had about the defendant’s whereabouts, and also stopped short of making an inquiry to either his relatives or defendant’s relatives who were likely to know the defendant’s whereabouts. West, 82 Wis. 2d at 164-65. In Haselow, the plaintiff stopped short of attempting to locate the defendant in Hawaii despite information from the defendant’s father that he was living there. Here, there is simply no evidence that Loppnow ‘stopped short’ in his pursuit of Bielik’s address, in Orlando or elsewhere” (¶ 15). When Bielik’s lawyer failed to provide the Florida address, Loppnow followed other leads and sources. The record showed that Loppnow exercised reasonable diligence (see ¶ 21).

The court was also satisfied that Loppnow’s substitute service was sufficient. The discussion is necessarily fact intensive, revolving around facts concerning newspaper circulation for the area where Bielik was believed to be living.

Criminal Law

The defendant, age 66, was convicted after a bench trial of stalking a 17-year-old girl. On appeal, he contended that the evidence was insufficient to support the conviction.

The court of appeals affirmed in an opinion written by Judge Fine. “In sum, there is more than sufficient evidence under our standard of review to support beyond a reasonable doubt Eichorn’s stalking conviction. Although Eichorn refers us to cases where the stalking persisted over a long time, and what happened here spanned apparently fewer than fifteen minutes, the statute, as we have seen, specifically provides that stalking may be ‘a series of 2’ acts over a ‘short’ time if the acts ‘show a continuity of purpose.’ Wis. Stat. § 940.32(1)(a). Eichorn’s acts reveal beyond a reasonable doubt his ‘continuity of purpose’ to, as he testified, take ‘a long shot’ that she might go with him” (¶ 9).

In 2005, the Wisconsin Department of Natural Resources (DNR) issued a public notice of its intent to reissue a Wisconsin Pollutant Discharge Elimination System (WPDES) permit to Fort James Operating Company in Green Bay. A copy of the proposed permit accompanied the public notice. In lieu of limiting mercury discharges, the proposed permit required mercury sampling under an alternative-limitation plan authorized by Wisconsin Administrative Code section NR 106.145. The proposed permit also included a phosphorus-effluent limitation, compliance with which was to be determined as a rolling 12-month average. The DNR instructed interested citizens to submit written comments or request a public hearing on the proposed permit within 30 days.

The Clean Water Action Council of Northeastern Wisconsin Inc. and other plaintiffs (collectively referred to in this synopsis as the council) objected to the proposed phosphorus limitations, claiming among other things that the DNR failed to conduct a “reasonable- potential analysis” required by federal law to determine the impact of additional phosphorus discharges on water quality, and that state rules permitting expression of phosphorus-effluent limitations as a rolling 12-month average violated federal law. The council did not contest the permit terms governing mercury sampling (see ¶ 3).

The DNR reissued the permit without substantive changes. The council then petitioned the DNR for review pursuant to Wis. Stat. section 283.63(1) and requested a public hearing. The council renewed its earlier assertions and raised new objections, including charges that the permit required mercury sampling too infrequently and that a reasonable- potential analysis was also required for mercury discharges. The DNR denied the council a hearing on its objections to the mercury provisions, citing its failure to raise these objections during the public comment period. The council was also denied a public hearing on many of its challenges to permitted phosphorus discharges because the DNR concluded that it lacked authority to resolve any challenges based on federal law.

The council then petitioned for judicial review. The circuit court dismissed the petition and affirmed the DNR’s decision. Relying on both its interpretation of statutory language and the exhaustion-of-administrative-remedies doctrine as articulated in Village of Thiensville v. DNR,130 Wis. 2d 276, 386 N.W.2d 519 (Ct. App. 1986), the court concluded any contested issues must be raised during the public comment period. The circuit court also rejected the council’s federal law challenges, reasoning that the U.S. Environmental Protection Agency (EPA) possessed ultimate authority over the state’s issuance of permits, did not object to the permit, and could not be joined as a party (see ¶ 9).

In a decision authored by Judge Brunner, the court of appeals reversed the decision of the circuit court. The first issue considered by the appellate court was whether the DNR’s failure to receive submissions disputing the permit’s mercury monitoring requirements bars the council from challenging them in a section 283.63 public hearing. The court concluded that “[n]either Wis. Stat. § 283.63’s language nor our decision in Village of Thiensville supports the DNR’s position. The availability of a § 283.63 hearing is not dependent on whether the DNR has received notice of the petitioner’s claims during the public comment period. The DNR and circuit court improperly denied the Council an opportunity to demonstrate the unreasonableness of the permit terms governing mercury discharges” (¶ 22).

The second question reviewed on appeal relates to the DNR’s conclusion that it lacked authority to determine whether state law complies with federal environmental legislation and rules. The court of appeals held that “the DNR possesses authority to determine whether provisions within a state-issued wastewater discharge permit comply with federal law. Contrary to the DNR’s claims, no authority we have reviewed reserves to the EPA the exclusive right to determine state compliance with federal environmental legislation or rules. Our legislature has directed that all rules promulgated, and permits issued, comply with federal law, and the DNR acts within its statutory authority when determining whether they do so” (¶ 33).

Family Law

The parties’ marriage ended in divorce in 2004. Several years later the circuit court issued a sua sponteorder modifying the placement order governing the physical placement of the parties’ minor daughter. The statutory provisions authorizing the modification of legal custody and physical placement orders are set forth in Wis. Stat. section 767.451. “The statute includes one set of standards for modifications that would substantially alter the amount of time a parent may spend with the child, § 767.451(1), and another for those that do not substantially alter the amount of time a parent may spend with the child, see § 767.451(3), like the court’s modification in the present case” (¶ 4).

The issue before the court of appeals was whether the circuit court had the authority under section 767.451(3) to sua sponte modify the physical placement order. In a decision authored by Judge Higginbotham, the appellate court concluded that the circuit court exceeded its authority when entering the modification order. “As in § 767.451(1), a court is authorized to modify an order under § 767.451(3) only ‘upon petition[,] motion or order to show cause by a party.’ The statute does not authorize a court to sua sponte modify a placement order” (¶ 9).

Accordingly, the court of appeals reversed the order of the circuit court modifying the physical placement of the parties’ minor daughter.

Real Property

Wis. Stat. section 100.18(1) provides in pertinent part that “[n]o person with intent to sell real estate shall make [a] statement or representation of any kind to the public relating to such ... sale of such real estate or to the terms or conditions thereof, which statement or representation contains any assertion, representation or statement of fact which is untrue, deceptive or misleading.” This statute applies only to statements or representations made in connection with real-estate sales if the statements or representations were made before the seller accepted the purchaser’s offer to purchase, because “‘statements made to the other party to a contract’ after the contract is formed ‘are not statements made “to the public’” (¶ 2) (citations omitted).

In this case, the only issue on appeal was whether painting a basement wall can be a misrepresentation under section 100.18(1) if a jury believes that the painting was done to hide evidence that the basement leaked. The plaintiff-purchaser sought recovery under the statute from the defendants-sellers because the basement leaked after the purchaser moved into the home. The circuit court granted summary judgment to the defendants, opining that the “painting of a wall cannot be deemed a misrepresentation to the public” (¶ 8).

In a decision authored by Judge Fine, the court of appeals reversed. Although there are no cases that have decided whether an act, as opposed to an oral or written verbal assertion, can be a “representation” as that word is used in section 100.18(1), courts have recognized in analogous situations that acts can constitute representations of fact (see ¶¶ 10-11). In this case, the appellate court concluded that “[a] reasonable jury could thus find that painting over evidence of a leaky basement was a ‘representation’ that the basement did not leak” (¶ 11).

The appellate court further concluded that there are genuine issues of material fact in this case as to whether the defendants painted their basement and, if so, thus misrepresented the basement’s condition. Accordingly, it reversed the circuit court’s order granting summary judgment and remanded the case for a trial (see ¶ 1).

Torts

Fischer and Steffen were in an automobile accident. Fischer sustained about $12,000 in medical expenses; his insurer, American Family, paid its $10,000 limit for medical expense coverage. Fischer sued Steffen and her insurer and also named American Family because of its subrogated interest. Steffen, who was insured by Wilson Mutual, defended on the ground that she suffered a sudden, unexpected epileptic seizure. The insurance companies arbitrated American Family’s subrogation claim. The arbitrator ruled in favor of Steffen (no liability), and American Family dismissed itself from the lawsuit with prejudice. Fischer, however, took her claim to trial and obtained a verdict finding Steffen negligent. The circuit court reduced Fischer’s medical expenses from $12,000 to $2,000 in light of the arbitrator’s determination. Fischer appealed.

The court of appeals affirmed in an opinion authored by Chief Judge Brown. The court applied Paulson v. Allstate Insurance Co., 2003 WI 99, 263 Wis. 2d 520, 665 N.W.2d 744, in explaining the “interplay between the subrogation rule and the collateral source rule” (¶ 1). Fischer effectively claimed waiver by conduct. “While Fisher does not exactly say so, we construe his argument to be that, when American Family gambled at arbitration before a lawsuit was even filed and lost, its right to subrogation was over. Therefore, any money which might have been reimbursed to American Family by reason of a lawsuit stayed in the hands of Wilson Mutual and, being in Wilson Mutual’s hands, the funds were fair game for Fischer to collect under the collateral source rule” (¶ 10).

The court disagreed with Fischer. “In other words, once the plaintiff was paid, what occurred between the two insurers was a matter for the two insurers to decide. The supreme court reasoned that this result, keeping the plaintiff out of the pie to be split between the insurers so long as the plaintiff had already been made whole, encourages settlement of subrogation claims among insurers, reduces litigation expenses and extols freedom of contract. So, in spite of the fact that the tortfeasor’s insurer did not have to pay a hundred cents on the dollar, the supreme court held that this does not open the door for the victim to seek the money that the tortfeasor’s insurer saved as a result of the settlement negotiations. Here, rather than settlement negotiations, the subrogated insurer decided to roll the dice with arbitration. In our view, American Family’s decision to arbitrate its claim is similar to the decision made by the Paulsons’ insurer to enter into settlement negotiations with the tortfeasor’s insurer. In both situations, the two insurers were sparring over who should pay what, after the victim had already been paid the policy limits. Whether by settlement negotiations or by arbitration, the vehicle should not matter; what should matter is that the insurers were acting to resolve the disputed issue that existed between them” (¶¶ 12-13).

The court rebuffed Fischer’s attempts to explain why Paulson did not control. “[O]ur supreme court has decided, as a matter of public policy, that once the plaintiff has been paid in full by the subrogated insurer, that insurer stands in the shoes of the plaintiff. From then on, it is no business of the plaintiff how the subrogated insurer goes about seeking reimbursement for its outlay from the tortfeasor and the tortfeasor’s insurer. And if the subrogated insurer somehow does not retrieve full reimbursement, it is still not any business of the plaintiff’s. Here, when American Family chose to pursue reimbursement through arbitration, it was American Family’s decision alone to make. Just because it did not get what it was seeking is no reason to suddenly allow Fischer the power to seek what American Family failed to receive. The result in this case comports with our supreme court’s policy decision” (¶ 19).

The final issue concerned Fischer’s demand for costs on the ground that he served Steffen with a request to admit her negligence. Steffen admitted nothing other than her history of seizures. Based on the verdict in his favor, Fischer moved for costs, which the circuit court denied. The court of appeals held that this issue was a “nonstarter.” Based on the evidence, Steffen’s denial was reasonable. “That the jury saw it differently than the arbitration panel is good for Fischer, but it does not mean he gets costs” (¶ 21).

Reuben bought lake property from Higgins and later sued her and a surveyor, Koppen, when he discovered that he could not build his home where he had planned because of zoning restrictions. A key issue concerned representations about what turned out to be inaccurate and misleading surveys. The jury answered “no” when asked if Higgins had made false or misleading statements, contrary to Wis. Stat. section 100.18. On postverdict motions, however, the circuit court changed the answer to “yes” and as a consequence awarded more than $100,000 in damages, costs, and attorney fees. Higgins appealed on numerous grounds.

The court of appeals reversed in part and affirmed in part in an opinion written by Judge Snyder. First, the trial judge erred by changing the jury’s answer. The court’s analysis is summarized as follows: “If Higgins did not give the 2003 survey drawing to Reuben with the ‘intent to sell the Okauchee Lake property or with the intent to induce the purchase of the Okauchee Lake property,’ her actions did not meet the definition of an unfair trade practice under Wis. Stat. § 100.18(1). See Wis. JI – Civil 2418. Higgins’ testimony at trial provided the credible evidence necessary to support the jury’s answer to Question No. 1 in the negative. The circuit court was clearly wrong to reject the jury’s finding because the court felt a different interpretation of the evidence was more reasonable” (¶ 23).

Second, Higgins argued that the economic loss doctrine foreclosed Reuben’s tort-based claims. She did not, however, raise this defense until motions after verdict. The circuit court ruled that the issue was waived based on her dilatory assertion. The court of appeals affirmed, holding that Higgins’s untimely assertion of the economic loss doctrine waived the issue (see ¶ 28).

Next, Higgins raised an array of evidentiary issues, which are mostly fact intensive. Worthy of note is that the circuit court properly refused to permit Reuben’s architect’s alleged negligence to be raised as an issue. Higgins offered no expert testimony on an architect’s standard of care, which was a matter beyond the jury’s common knowledge (see ¶ 35).

Finally, the circuit court properly rejected Higgins’s efforts to name Reuben’s real estate lawyer as an indispensible party. Higgins was essentially trying to bring a third-party legal malpractice claim, which was properly denied.